[Congressional Record Volume 144, Number 40 (Wednesday, April 1, 1998)]
[Senate]
[Pages S3019-S3021]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
WIRELESS TELEPHONE PROTECTION ACT
Mr. DOMENICI. Mr. President, I ask the Chair lay before the Senate a
message from the House of Representatives on the bill (S. 493) to amend
section 1029 of title 18, United States Code, with respect to cellular
telephone cloning paraphernalia,
The PRESIDING OFFICER laid before the Senate the following message
from the House of Representatives:
Resolved, That the bill from the Senate (S. 493) entitled
``An Act to amend section 1029 of title 18, United States
Code, with respect to cellular telephone cloning
paraphernalia'', do pass with the following amendments:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Wireless Telephone
Protection Act''.
SEC. 2. FRAUD AND RELATED ACTIVITY IN CONNECTION WITH
COUNTERFEIT ACCESS DEVICES.
(a) Unlawful Acts.--Section 1029(a) of title 18, United
States Code, is amended--
(1) by redesignating paragraph (9) as paragraph (10); and
(2) by striking paragraph (8) and inserting the following:
``(8) knowingly and with intent to defraud uses, produces,
traffics in, has control or custody of, or possesses a
scanning receiver;
``(9) knowingly uses, produces, traffics in, has control or
custody of, or possesses hardware or software, knowing it has
been configured to insert or modify telecommunication
identifying information associated with or contained in a
telecommunications instrument so that such instrument may be
used to obtain telecommunications service without
authorization; or''.
(b) Penalties.--
(1) Generally.--Section 1029(c) of title 18, United States
Code, is amended to read as follows:
``(c) Penalties.--
``(1) Generally.--The punishment for an offense under
subsection (a) of this section is--
``(A) in the case of an offense that does not occur after a
conviction for another offense under this section--
``(i) if the offense is under paragraph (1), (2), (3), (6),
(7), or (10) of subsection (a), a fine under this title or
imprisonment for not more than 10 years, or both; and
``(ii) if the offense is under paragraph (4), (5), (8), or
(9), of subsection (a), a fine under this title or
imprisonment for not more than 15 years, or both;
``(B) in the case of an offense that occurs after a
conviction for another offense under this section, a fine
under this title or imprisonment for not more than 20 years,
or both; and
``(C) in either case, forfeiture to the United States of
any personal property used or intended to be used to commit
the offense.
``(2) Forfeiture procedure.--The forfeiture of property
under this section, including any seizure and disposition of
the property and any related administrative and judicial
proceeding, shall be governed by section 413 of the
Controlled Substances Act, except for subsection (d) of that
section.''.
(2) Attempts.--Section 1029(b)(1) of title 18, United
States Code, is amended by striking ``punished as provided in
subsection (c) of this section'' and inserting ``subject to
the same penalties as those prescribed for the offense
attempted''.
(c) Definitions.--Section 1029(e)(8) of title 18, United
States Code, is amended by inserting before the period ``or
to intercept an electronic serial number, mobile
identification number, or other identifier of any
telecommunications service, equipment, or instrument''.
[[Page S3020]]
(d) Applicability of New Section 1029(a)(9).--
(1) In general.--Section 1029 of title 18, United States
Code, is amended by adding at the end the following:
``(g)(1) It is not a violation of subsection (a)(9) for an
officer, employee, or agent of, or a person engaged in
business with, a facilities-based carrier, to engage in
conduct (other than trafficking) otherwise prohibited by that
subsection for the purpose of protecting the property or
legal rights of that carrier, unless such conduct is for the
purpose of obtaining telecommunications service provided by
another facilities-based carrier without the authorization of
such carrier.
``(2) In a prosecution for a violation of subsection
(a)(9), (other than a violation consisting of producing or
trafficking) it is an affirmative defense (which the
defendant must establish by a preponderance of the evidence)
that the conduct charged was engaged in for research or
development in connection with a lawful purpose.''.
(2) Definitions.--Section 1029(e) of title 18, United
States Code is amended--
(A) by striking ``and'' at the end of paragraph (6);
(B) by striking the period at the end of paragraph (7) and
inserting a semicolon; and
(C) by striking the period at the end of paragraph (8); and
(D) by adding at the end the following:
``(9) the term `telecommunications service' has the meaning
given such term in section 3 of title I of the Communications
Act of 1934 (47 U.S.C. 153));
``(10) the term `facilities-based carrier' means an entity
that owns communications transmission facilities, is
responsible for the operation and maintenance of those
facilities, and holds an operating license issued by the
Federal Communications Commission under the authority of
title III of the Communications Act of 1934; and
``(11) the term `telecommunication identifying information'
means electronic serial number or any other number or signal
that identifies a specific telecommunications instrument or
account, or a specific communication transmitted from a
telecommunications instrument.''.
(e) Amendment of Federal Sentencing Guidelines for Wireless
Telephone Cloning.--
(1) In general.--Pursuant to its authority under section
994 of title 28, United States Code, the United States
Sentencing Commission shall review and amend the Federal
sentencing guidelines and the policy statements of the
Commission, if appropriate, to provide an appropriate penalty
for offenses involving the cloning of wireless telephones
(including offenses involving an attempt or conspiracy to
clone a wireless telephone).
(2) Factors for consideration.--In carrying out this
subsection, the Commission shall consider, with respect to
the offenses described in paragraph (1)--
(A) the range of conduct covered by the offenses;
(B) the existing sentences for the offenses;
(C) the extent to which the value of the loss caused by the
offenses (as defined in the Federal sentencing guidelines) is
an adequate measure for establishing penalties under the
Federal sentencing guidelines;
(D) the extent to which sentencing enhancements within the
Federal sentencing guidelines and the court's authority to
sentence above the applicable guideline range are adequate to
ensure punishment at or near the maximum penalty for the most
egregious conduct covered by the offenses;
(E) the extent to which the Federal sentencing guideline
sentences for the offenses have been constrained by statutory
maximum penalties;
(G) the extent to which Federal sentencing guidelines for
the offenses adequately achieve the purposes of sentencing
set forth in section 3553(a)(2) of title 18, United States
Code;
(H) the relationship of Federal sentencing guidelines for
the offenses to the Federal sentencing guidelines for other
offenses of comparable seriousness; and
(I) any other factor that the Commission considers to be
appropriate.
Amend the title so as to read ``An Act to amend title 18,
United States Code, with respect to scanning receivers and
similar devices.''.
Mr. KYL. Mr. President, I rise today in support of S. 493, the
Cellular Telephone Protection Act, and urge the President to sign this
important piece of legislation without delay. This bill makes it easier
for federal law enforcement to stop cell phone cloning by targeting
cloning at its source--the equipment (``black boxes'') used to alter or
modify the ESN (electronic serial number) of a cellular phone.
I am particularly pleased that this bill has the support of the U.S.
Secret Service, the Department of Justice, the wireless phone industry,
and Congress.
This bill is not only a victory for law enforcement, but also for the
56 million Americans who currently use wireless/cellular service.
According to the cellular telecommunications industry, consumers lose
in excess of $650 million a year due to fraud, much of it as a result
of cloning. This results in increased costs to cellular customers.
S. 493 is the first in a series of anti-crime initiatives I
introduced that are aimed at modernizing U.S. law to reflect changes in
technology. It is another step to assure that law-abiding citizens
don't inadvertently become part of a criminal activity.
Wireless fraud is not a victimless crime. It strikes at the heart of
technology that is improving the safety, security and business
productivity of the entire Nation. This bill will help stop the
criminal cloning of wireless phones by giving law enforcement the tools
they need to combat wireless fraud.
The Secret Secret--the Federal agency charged with investigating
cloning offenses--has doubled the number of arrests in the area of
wireless telecommunications fraud every year since 1991, with 800
individuals charged for their part in the cloning of cellular phones in
1996.
At a House Subcommittee on Crime hearing law year, the Secret Service
conducted a demonstration in which a phone was cloned in approximately
30 seconds. At that hearing, law enforcement officials testified at how
cloning technology is increasingly being used in various types of
criminal activity--especially in drug crimes.
On February 24, 1998, I chaired a hearing of the Senate Subcommittee
on Terrorism, Technology, and Government Information in which the
Secret Service testified that foreign terrorists were financing their
operations in the U.S. with the aid of ``cloned'' cellular telephones.
Deputy Assistant Director Richard Rohde testified that foreign
terrorists often make money by running illegal ``cell-sell'' rings.
These rings involve the illegal sale of long-distance telephone access
using fraudulently-obtained service. One common method is ``renting''
the use of a cellular phone which has been ``cloned,'' or modified to
direct billing identification to the user of a different phone.
While the current cell phone law (18 U.S.C. 1029) has been useful in
prosecuting some cloners, the statute has not functioned well in
stopping those who manufacture and distribute cloning devices. In
testimony before the House Subcommittee on Crime, Michael C. Stenger of
the Secret Service stressed the need to revise our current cell phone
statute:
Due to the fact that the statute presently requires the
proof of ``intent to defraud'' to charge the violation, the
distributors of the cloning equipment have become elusive
targets. These distributors utilize disclaimers in their
advertising mechanisms aimed at avoiding a finding of
fraudulent intent. This allows for the continued distribution
of the equipment permitting all elements of the criminal
arena to equip themselves with free, anonymous phone service.
Under S. 493, a prosecutor would need to prove that an individual
knowingly uses, produces, traffics in, has control or
custody of, or possesses hardware or software, knowing it has
been configured to insert or modify telecommunications
identifying information associated with or contained in a
telecommunications instrument so that such instrument may be
used to obtain telecommunications service without
authorization.
The removal of the ``intent to defraud'' language in 18 U.S.C. 1029
only applies to the possession and use of the hardware and software
configured to alter telecommunications instruments. It does not apply
to those who are in the possession of cloned phones. Nor does it apply
to those in the possession of scanning receivers (which do have some
legitimate uses). Someone who does not know that a telecommunications
device has been altered to modify a telecommunications instrument would
not be criminally liable under this section.
I am very proud of this important crime-fighting legislation and look
forward to its prompt signature by the President.
Mr. LEAHY. Mr. President, in 1994, I authored the first law to
provide specific protection against ``clone'' telephones. While the
main focus of the Communications Assistance for Law Enforcement Act, or
CALEA, was to help our law enforcement agencies deal with the challenge
of new digital telecommunications equipment and services, the law also
contained important bans on the use and trafficking of clone phones,
scanning receivers, and hardware and software used to steal cellular
service.
Specifically, in CALEA, we amended the Counterfeit Access Device law,
18 U.S.C. Sec. 1029, by adding a provision to criminalize the use and
possession, with intent to defraud, of altered telecommunications
instruments, or scanning receivers, hardware or software, to obtain
unauthorized access to telecommunications services. This law also
[[Page S3021]]
added to the federal criminal code a definition of scanning receivers
to mean devices used to intercept illegally wire or electronic
communications.
``Clone'' telephones are used illegally to allow free riding on the
cellular phone system and result in theft of that service. The cellular
telephone industry estimates that it loses $650 million per year due to
clone phones. I recall testimony at hearings I chaired jointly with
Representative Don Edwards on CALEA about the need to address this
problem in CALEA. Tom Wheeler, President of the Cellular
Telecommunications Industry Association, testified in 1994 about:
. . . people being surprised by ``humongous'' cellular
bills because somebody had snatched their electronic code out
of the air, cloned that into another phone, and was charging
phone calls to Colombia or wherever onto their phone.
S. Hrg. 103-1022, at p. 148 (August 11, 1994).
In short, the theft of cellular telephone services amounts to
millions of dollars of losses to wireless service providers and to
consumers.
Just as disturbing, clone phones are used by drug dealers and other
criminals trying to evade police surveillance of their phone
conversations. The fraudulent use of electronic serial numbers, which
are critical in identifying the cellular phone subject to wiretap
orders, represented a real threat to privacy. Mr. Wheeler explained in
1994, ``If you have a situation where there is floating around out
there multiple users of the same electronic serial numbers, you don't
know who you are tapping.'' S. Hrg. 103-1022, at p. 148 (August 11,
1994).
Given the financial losses and the threats to privacy posed by clone
phones, I urge the cellular telephone industry to consider the
technical means available to better protect cellular phone service. In
particular, if strong encryption were used to encrypt the radio waves
transmitted from cellular phones to the nearest cell tower, stealing
those signals for use in a clone phone would be much more difficult, if
not impossible.
I have long been a proponent of more widespread use of strong
encryption. Clone phones are a perfect example of where the use of
strong encryption would be far more effective to prevent this crime
from occurring than all the criminal laws we could consider passing.
This bill, as modified by the House, builds upon the work we
accomplished in CALEA.
Current law contains an ``intent to defraud'' requirement that has
apparently posed a stumbling block for law enforcement to crack down on
the cloning of cellular phones. This bill would remove this intent
requirement and make it illegal to use, sell or possess hardware or
software knowing it has been configured for the purpose of altering a
telephone to steal service.
The House of Representatives made a number of significant
improvements to S. 493 to ensure that, upon removal of the ``intent to
defraud'' requirement, the bill did not sweep too broadly. Indeed, I
understand that even some cellular companies were concerned that the
original bill introduced by Senator Kyl might inadvertently have
applied to machinery used by legitimate companies to test or reprogram
their equipment.
Removal of the ``intent to defraud'' scienter requirement may still
pose problems for those legitimate companies that with to offer
``extension'' telephones for cellular telephones. In fact, the Federal
Communications Commission has a proceeding underway to determine
whether companies may be allowed to alter the electronic serial number
of a cellular telephone to allow more than one phone to have the same
contact number.
Passage of this law may be interpreted as prejudging the outcome of
that proceeding by making illegal the use of clone phones, even by
legitimate subscribers who pay their bills. That would be regrettable.
This bill should not affect the outcome of the FCC proceeding, since
the public interest may be well served by allowing competition into the
extension cellular telephone business. Depending on the outcome of the
FCC proceeding, we may be revisiting this legislation.
This bill, as modified by the House, is supported by the FBI, Secret
Service and the Cellular Telephone Industry Association (CTIA). We made
important progress in this area when we passed CALEA, and I am glad to
support legislation that will further help law enforcement combat
cellular telephone fraud by those who steal cellular service.
Mr. DOMENICI. Mr. President, I ask unanimous consent that the Senate
concur in the amendments of the House.
The PRESIDING OFFICER. Without objection, it is so ordered.
____________________